Marginal Charity – An Opportunity for Big Business

Big businesses strive for efficiency. If something can be reduced, eliminated, streamlined, and automated then at some point it will be. Each tiny advantage can be huge at scale, and can mean the difference between growing and laying off employees. Flaunting success, hiding failure, and maximizing at the margins are standard business operating procedures, but they create a void that could be filled for companies to do meaningful things that can be viewed in a charitable light. In The Elephant in the Brain, Robin Hanson and Kevin Simler talk about “marginal charity” an idea that you can do something that economically doesn’t add much cost to your own life, only marginally diminishes your efficiency, but provides a big element of charity to the business you are already doing.

 

In the book, the authors consider a high rise apartment building. Say 10 floors is the height to shoot for in order to achieve maximum efficiency. There may be situations where adding one more floor would not increase the cost by a significant amount, but would reduce the efficiency that the building owners and property developers expect from the complex, especially if the final floor was developed to allow for more low-income/affordable housing. Adding this extra story doesn’t make sense in a pure efficiency model, but if you are trying to add a touch of charity to the business you are already engaged in as the developer, you can do a lot of good by providing many additional affordable housing units with little marginal cost to yourself.

 

Hanson and Simler write, “In terms of providing value to others, marginal charity is extremely efficient. It does a substantial amount of good for others at very little cost to oneself. (In other words, it has an incredible ROD [Return on Donation]).” Finding a way to add a little extra while taking away from your own individual efficiency may make the entire system a bit more equitable, and a bit more efficient as a whole. Small tweaks to how to do things and create the systems that shape our lives can help provide for greater long-term benefit even if they slightly limit what is possible for us now.

 

Since we are not all property developers, we won’t all have this type of chance to make a big difference through small actions in a business context. But we can think about marginal charity in our own lives and try to set up systems and structures that help us default toward charitable behavior. I don’t think this looks like donating a dollar to the thing the grocery store check-out system asks you to donate to (I’d recommend saving that money and making a single larger donation to a charity featured on GiveWell), but it may look like picking up bottles or trash along the street you already walk down every day. It may look like increasing your recurring donation by an additional $5. It may look like making personal choices that add a little extra cost, but reduce energy use, plastic use, or single use item consumption. We can think about charity on a marginal level, encourage others to do so, and that will help build a spirit of looking for those marginal charity wins. They may not change the world, but they might help set up a culture and system that will.